Tax Deductions on Work Related Expenses
If you are looking for an area of potential deductions to focus on this year for your tax return, consider work related tax deductions. You are eligible for tax deductions whether you own your own business or go into an office each day. Considering all possible work related tax deductions can really add up over time and provide a nice tax break come April 15th!
Possible deductions even if you work in a “traditional” job:
- Legal fees associated with keeping your job
- Professional organization dues
- Home office expenses (must be dedicated space used primarily for work) including phone/fax and internet costs
- Education expenses related to your job
- Uniforms and other work clothing
- Subscriptions to professional journals or magazines
- Medical exams that are required by your employer
- Licenses, regulatory fees or occupational taxes related to your job
- Some travel related expenses related to your job (note: you cannot deduct mileage to/from your office each day)
- Individual retirement plans if you own your own business
Important Potential Caveats for Deducting Job Related Expenses
There are several important things to note when deducting work related expenses. These items are only tax deductible if:
1. They are required for you to complete your job.
2. They meet the threshold for “ordinary and necessary” as defined by the IRS…meaning these need to be reasonable and accepted in your line of work.
3. You must itemize your deductions when you file your return (using Schedule A)
4. Your expenses must be unreimbursed by your employer (meaning you must have paid these expenses out of pocket).
5. These expenses must total no more than 2% of your adjusted gross income (AGI).
How to Keep Track of Potential Work Related Deductions
So, now that you have a sense of the kinds of things that you can think about deducting when it comes time to complete next year’s tax return, it’s time to think about how to keep track of all of these potential savings. The best thing that you can do to keep track of your potential deductions throughout the year is to keep a file (electronic or paper) where you can easily add receipts, notes and correspondence related to your work related tax expenses. If you want to get fancy, you can go one step further and also keep a spreadsheet with basic information about the expense – date, expense type and amount. Keeping track as the year goes by is so much easier than trying to piece this together in February or March, when some of the expenses are nearly a year old.
If you still have some questions about what types of work related expenses are deductible, ways to look ahead and plan for more deductions in the coming years or how to capture all of these deductions on your actual tax return, considering getting support from a trustworthy tax firm. Success Tax Relief can help you make the most of all of your possible tax deductions and can help make sure that you file an accurate and audit proof return to the IRS. Contact us today to learn more about our services!